The housing market has changed the equation of motion

In this housing market, it makes sense to move. American homeowners sitting on the lowest mortgage rates in recent history will find that buying their next home is a lot more expensive. Tenants facing severe inflation may be better off renewing a lease rather than looking for a new lease. And for most people, it’s hard to find the right next door when there are so few vacant homes available.

The simplest and most costly decision for many Americans would be to stay put—even if their homes become too small, too big, too crowded, too far from work, too isolated from family, or too many to maintain.

The commuting rate of Americans, both across town and across the country, has been steadily declining since the 1980s. Now all conditions in the housing market are aligned to further reduce this mobility rate. This is a problem both for the broader economy – workers may need to relocate to access new jobs – and for the millions of families who will find it difficult to change their homes to fit their changing lives.

“All of this suggests that America may be stuck in place,” said Lawrence Yun, chief economist at the National Association of Realtors.

One possible outcome: “Unanimously,” Mr. Yoon said, “I think people would say there is less happiness in the country because people live in a poor housing unit.”

The poorly housed Keren Bogolub unit is a double bed and one bathroom in Boulder, Colorado, that she shares with her partner and third colleague. Moving in 2020, they were drawn to what seemed like a cheap, dog-friendly temporary home — a good place to finish graduate school on meager salaries.

But a year after graduation, they still live like this: Mrs. Bogolub and her partner, Colin Storrock, in a room with their bed and their two remote offices. They set up the room so that one of them could change clothes even if the other was on Zoom. They’ve taped on flashing computer lights that can make it hard to fall asleep at night.

“The plan was get out, get jobs, move,” said Ms. Bogolub, 33. “We’ve done two of those three things.”

The third method proved to be much more difficult. Their alternatives are a study of the absurdity of today’s American housing market. Boulder rents rose more than 15 percent last year. Boulder County also lost more than 1,000 homes to wildfires in December, making competition for housing even more intense. Mrs. Bogolub considered the purchase as well. Then a tiny two-bed, one-bathroom home two blocks away sold this month: 864 square feet in need of remodeling for $1.25 million.

By comparison, a bedroom with two desks doesn’t look too bad — even for two adults in their thirties working decent jobs.

“This is kind of mind-boggling,” said Ms. Bogolub, now with the Colorado Geological Survey. “If we can’t really move forward, I don’t know who can.”

In the mid-1980s, about one in five people in America moved annually, most of them within the same county. And by 2021, that number has fallen to one in 12. All the signs this spring are for more people stuck as Ms. Bogolub has been: new mortgage applications and home sales are down. The money spent on the reconstruction of housing has increased significantly. Tenants are renewing their lease contracts at record levels.

The housing market has changed the way we transition for almost everyone. With rents rising at a record pace, tenants usually face lower price hikes due to the current owner rather than signing a new lease. That’s because landlords want to avoid the costs of finding new tenants and handing over properties.

“You get a discount for staying where you are,” said Jay Parsons, chief economist at RealPage, a platform used by property managers to process and track rents. The problem, he said, is not just that moving is more expensive. Buildings with more vacancies today are also the most expensive ones.

In the calculus of homeowners, mortgage rates fell to a recent low earlier in the pandemic. With widespread refinancing, four out of five mortgage holders today have an interest rate of less than 5 percent (half have a rate of 4 percent or less). Now these bargaining rates will have the effect of locking up many homeowners if interest rates remain high after the recent hike.

These dynamics are related to each other. When people buy a home or find a new rental, they create a series of vacancies that open up behind them.

“Most people live off other people’s decisions to evacuate the unit,” said Doyle Myers, professor of politics, planning and demography at the University of Southern California.

Each newly built home has a similar effect, allowing for a series of vacancies, including between rentals. On the contrary, everyone no A movement that helps bridge the local market for others.

Economists were primarily concerned about the long-term decline in long-distance movements, given that migration from one part of the country to another has tended to be a source of upward movement.

But nowadays, the most prosperous regions of the country also have the most expensive housing. Economists say this deters people from moving to where they might find better jobs, ultimately constraining America’s economic growth.

Since the housing crash in the mid-2000s, almost all the decline in mobility nationwide has been due to a decrease in local movements, and in local movements tenantsfound Mr. Myers and colleagues.

During this time, the supply of new housing built in America increasingly fell short of demand. Millennials, now the oldest adult generation alive, grew up during the same period trying to start their own families and later buy their homes. The combination of this demographic pressure and the growing shortage of housing has helped create today’s crisis of affordability.

In 2019, on the eve of the pandemic, there were 19.4 million more renters in America than in 2006. And so we expect there will be more renters by then as well. But by 2019, there were actually 3.6 million less Tenants who moved in the previous year than in 2006.

“This is a sharp decline,” said Riordan Frost, who studies mobility at the Harvard Joint Center for Housing Studies. “It’s really only going to go down because people can’t afford the rent that’s needed” for the new unit.

He said all of this matters, not just because people need to move for better jobs, or better homes. America remains deeply segregated by race and income, and research shows that the neighborhoods in which children grow up affect their fortunes in life. Mr Frost said that if people weren’t moving around that much, families in isolated or less prosperous places had fewer chances of breaking out of these patterns.

“If people fail to act to adapt to changing family conditions, it will have enormous social costs,” said Michael Andersen, a researcher at the Siteline Institute, who advocates for bigger housing. This means that young families who cannot move close to relatives for help, or elderly Americans are cut off from social networks.

In the coming years, many families may not simply emerge from some kind of frequency paralysis.

Joe Swidersky and his wife have been living in the same house in Washington Row since 2013. They want more space for their two daughters, who are now 7 and 2 years old. And cut the interest rate to 2.5 per cent. This made what should have been a fairly simple decision — a growing family needed a bigger home — more complex, Swaydersky said.

“What will you weigh more?” He said. Bigger Square or Higher Interest Rate? Lack of storage or high housing prices? “What will ultimately be the turning point?” He said. “We don’t necessarily know.”

Mrs. Bogolub, in Boulder, would likely stay in place for now too, if her landlord again offered to renew the lease without increasing the rent. While she and Mr. Storrock lived in this house, their lives had changed in at least one way that could ease their search for housing: Two months ago, their dog had died.

“When that happened, I was kind of like, ‘Well, I think on the one hand that probably improves our options for rental units,’” Ms Bogolub said. “

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